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The Second BRITCHAM Presidential Election Series: In Conversation with Muhammad Lutfi

CHAMBER UPDATES | 2 April 2019

The British Chamber of Commerce invited Muhammad Lutfi, Advisor of Jokowi’s Success team to a dialogue focused on trade and investment policy. The event was held at the Mandarin Oriental Jakarta on 12 March.

The British Chamber of Commerce invited Muhammad Lutfi, Advisor of Jokowi’s Success team to a dialogue focused on trade and investment policy at  Mandarin Oriental Jakarta. Photo courtesy of Britcham Indonesia/NOW!JAKARTA

The core of the presentation looked at Indonesia’s place in the world in 2045. It also looked at the achievements of the Jokowi-Jusuf Kalla administration during their time in office “Indonesia had gone through some difficult times but every time we have got through it,” Muhammad Lutfi said in opening remarks of his presentation about the condition of Indonesia today and the different challenges that Indonesia may face in the future. It reflected the development of several sectors including the economy, energy, tourism as well as infrastructure.

Regarding international trade, currently Indonesia is trading on the international stage. Therefore, in international finance, Indonesia is shifting from major currency in the world. Muhammad Lutfi with his statement said that “nothing is easy for Indonesia, but nothing is impossible”. Last year, Indonesia was considered a middle income country.

If looking at the Global Megatrend of 2045, there will be a lot of things happening world wide. Global Demography, World Urbanisation, Climate Change and Technology are the elements that need to be underlined by the Government of Indonesia. The rise of the global population will make a huge impact on climate change.

In order to move up from the position of middle-income country, Indonesia needs an more initiatives. Investment, infrastructure, and transfer of technology. Those things are the key of what Indonesia need to do to escape the position of middle country. There are three scenarios in order to foster Indonesia to escape from the middle-income country which are Base Case Scenario, High Scenario, Super High Scenario.

Indonesia needs to focus on investment, which contributes 33 per cent to the economy according to Lutfi. Investment could help Indonesia rise up from its middle-income  country status.  The second thing is  trade. The contribution of the trade to the GDP of Indonesia is 34 per cent. What Indonesia needs to do is focus on exports.  Manufacturing is the third component. The share of Manufacturing for GDP is around 22-23 per cent. In order to reach 6,4 per cent of GDP,  manufacturing needs to be industrialised.

The big question is how Indonesia can develop their transfer technology, manufacturing, trade, and investment. “Yes, we have a problem, but different task needs to overcome by Indonesia” Lutfi noted Indonesia need to accommodate this with  a good education system.

Indonesia still has inconsistencies in the education system especially with advanced education opportunities. Lutfi hopes that Jokowi will lead the education sector with ICT and a developed country like the UK, United States, or Japan.

The development of infrastructure is one of the best achievements of the Jokowi administration. It now takes just  15 minutes from Semarang to Solo and 4 to 5 hours between Semarang and Jakarta.

The manufacturing sector’s contribution to the national GDP is in the fourth position while other ASEAN countries average less than 10 per cent of manufacturing contribution to GDP. Indonesia needs progress in order to improving their investment climate. “We need to be number 35 in 2025 to attract 33 per cent investment to GDP, and we need to be number 10 in order to attract 39 per cent in 2045,” he said.

There are a lot of obstacles that Indonesia faces.  “This time we may not vote for the best person, but we need to vote for a kind and nice person and it is Pak Jokowi” he said in his closing remarks.